Many high Canadian dividend shares nonetheless commerce under 2022 highs regardless of the broader TSX now being at a file degree. Cuts to rates of interest in Canada are anticipated to proceed, and the U.S. Federal Reserve will possible start lowering rates of interest as early as subsequent month. This might set the stage for a rally in dividend shares subsequent 12 months as yield-hungry buyers shift out to fixed-income alternate options.

BCE

BCE (TSX:BCE) trades for near $47 per share on the time of writing in comparison with $74 at one level in 2022. The steep decline caught many long-term BCE buyers without warning.

Excessive rates of interest drove a lot of the pullback by 2022 and 2023 as buyers frightened that rising borrowing bills would put strain on the dividend progress. BCE spends billions of {dollars} yearly on capital tasks that embrace growth of the 5G community and set up of fibre optic traces. The corporate makes use of debt to fund a part of its capital packages, so the leap in debt bills has had an affect on income. In actual fact, BCE raised the dividend by 3.1% in 2024 in comparison with a median annual enhance of about 5% over the earlier 15 years.

Market circumstances have additionally been difficult for the communications big. Cell and web value wars drove down charges on subscriptions, whereas falling advert income within the media enterprise pressured BCE to promote or shut dozens of radio stations.

Trying forward, the worst needs to be over regardless of ongoing headwinds. BCE decreased workers by roughly 6,000 positions to scale back bills. The corporate can be trimming its capital program to protect money. Value battles will finally degree off, and regular charge cuts by the central financial institution will assist cut back borrowing prices.

BCE nonetheless expects 2024 income to be flat or barely larger in comparison with 2023, and adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) needs to be up a bit, so the pullback within the share value is perhaps overdone.

Ongoing volatility is anticipated, however buyers who purchase now can get a dividend yield of 8.5% from BCE.

Financial institution of Nova Scotia

Financial institution of Nova Scotia (TSX:BNS) is in a transition part as the brand new chief govt officer pursues a technique shift that can allocate extra capital to Canada, america, and Mexico and fewer to Peru, Chile, and Colombia, the place earlier bosses on the financial institution centered their progress investments.

Financial institution of Nova just lately introduced a US$2.8 billion deal to purchase a 14.9% stake in a U.S. regional financial institution, KeyCorp, to get a foothold within the American market the place it has trailed its friends. The deal was finished at a good valuation, so there may be good upside potential for BNS buyers.

The corporate’s fiscal third-quarter (Q3) 2024 outcomes confirmed that the transition efforts are beginning to bear fruit. The worldwide division delivered strong outcomes regardless of receiving much less capital, and the Canadian operations noticed deposits rise.

Financial institution of Nova Scotia’s provisions for credit score losses (PCL) got here in at $1.05 billion within the quarter in comparison with $819 million in the identical interval final 12 months and have been barely larger than fiscal Q2 this 12 months. Falling rates of interest ought to begin to take strain off debtors carrying an excessive amount of debt, so PCL ought to stabilize quickly after which decline in 2025.

Financial institution of Nova Scotia trades close to $67 per share on the time of writing. It was as excessive as $93 in 2022. Buyers who purchase on the present value can get a dividend yield of 6.3%.

The underside line on high dividend shares

BCE and Financial institution of Nova Scotia pay enticing dividends and nonetheless commerce at discounted costs. If in case you have some money to place to work in a self-directed TFSA, these shares need to be in your radar.